Profits, Outlook Improve At Utc

Earnings Climb 9% For Quarter

January 21, 2004|By MICHAEL REMEZ; Courant Staff Writer

United Technologies Corp. reported Tuesday that fourth-quarter earnings were up 9 percent from the prior year, with favorable foreign currency exchanges and revenue from its new Chubb division helping make up for continued weakness in commercial aerospace. For all of 2003, earnings were up 6 percent from 2002 on a 10 percent increase in revenue, to $31 billion.

Although the quarterly earnings of $1.16 a share beat analysts' consensus estimate by 3 cents, the Hartford-based company's stock price took a hit Tuesday, apparently hurt by news that Japan Air Lines canceled more than 200 flights this week because of cracks found in Pratt & Whitney engines.

UTC's stock, which has climbed 47 percent in the past year, closed at $94.80, down $2.70, or 2.8 percent, for the day.

In his conference call with analysts, Stephen F. Page, UTC's chief financial officer, reiterated the company's earnings forecast for 2004, saying UTC expects earnings between $5 and $5.30 a share. Earnings were $4.69 a share for 2003. Page gave an upbeat assessment for the year ahead. He said he expects continued strong performance from Otis Elevator, and continued improvements in profit margins from Carrier Corp.

Strong military sales have helped UTC's aerospace divisions weather weakness in their commercial businesses, he said, although the spare parts business there is starting to show signs of improvement, as well. Page said UTC would continue efforts to boost profit margins, and would continue to benefit from the global and product mix in its businesses. ``We finished the year strong, and we are starting 2004 strong,'' Page told the analysts.

UTC will use proceeds from tax settlements with the government and a recent agreement with DaimlerChrysler AG over the sale of MTU Aero Engines to help pay for continued restructuring in 2004, Page said.

Page offered no specifics except to say that he expected cost cutting across the board at UTC divisions. In a December meeting with analysts, George David, UTC's chairman, said he did not expect the restructuring moves to have a significant effect on employment at company operations in Connecticut.

Page also updated the analysts on a long-running dispute between UTC and the Pentagon over how the company calculates its overhead costs on military engine contracts. The Pentagon now says the company should repay $755 million on contracts dating back 20 years. An earlier assessment -- through 1996 -- was $261 million.

``We feel we have the better case here,'' said Page, adding that the company has ``appropriate reserves for this matter.''

On the grounding of the Japan Air Lines planes, Page said Pratt is working with the airline to find the root cause of the problem.

``We are all over it,'' he said. ``We don't see any major issues at this time, but of course the investigation is continuing.''

Page also told the analysts that David is expected to announce Page's successor as chief financial officer in about a month. Page plans to retire this year.